Woodford: Astra right to reject 'opportunistic' Pfizer bid

Neil Woodford is against Pfizer's swoop on AstraZeneca, describing the £63 billion bid as opportunistic.

Woodford, who said he had spoken to Pfizer chief executive Ian Read in an exclusive Citywire video interview to be released later today, said he believes Astrazeneca should remain a single entity.

His comments came shortly Astra rejected a second bid from its US rival last Friday, saying it undervalued the firm's prospects.

Woodford bought into AstraZeneca around five years ago through his Invesco Perpetual Income and High Income funds and remains a holder in the drugs giant via the £3.7 billion St James's Place mandate he recently won.

In a blog Woodford said: 'I have not been surprised to see bid interest in AstraZeneca. The company is undergoing a very significant, value-enhancing transformation and it appears opportunistic for a potential bidder to make an approach now before the full value of this transformation is recognised by the market.

He added: I was also not surprised to see the company decline the initial proposal from Pfizer because I believe it was absolutely right to conclude that it 'significantly undervalued Astrazeneca and its prospects'.

'As shareholders, we will remain close to the situation and are waiting to see how AstraZeneca responds to this morning’s improved bid. We support Pascal Soriot and his team in their current strategy and believe that the company has an exciting future as an independent entity. We expect significant value creation over the next 3 to 5 years as this strategy bears fruit.'

Over the Bank Holiday weekend the Labour government said the bosses of Astra and Pfizer should be called before parliament for questioning and accused the coalition government of 'cheerleading' for Pfizer.

Reports emerging this morning claim Astra has urged the government to stay 'neutral' and that it is set to increase its defence by revealing details on a range of new drugs under development.

Woodford's vision

Woodford's comments came as he set out plans for his new venture Woodford Investment Management.

Woodford (pictured) has said it is his ambition to build a firm of a significant size rather than a boutique business.

‘I intend to be here for decades to come. A limited timescale at Woodford Investment Management has not even entered my thinking,’ he told The Sunday Telegraph.

The firm’s first fund will be called CF Woodford Equity Income. As revealed by Citywire last week, the fund will target income of greater than 110% of the FTSE All Share Index and a yield of 4.1%.

According to the Telegraph, the firm is likely to launch further funds including a global equity income offering, with bond funds likely to follow. The Financial Times reported the firm could also offer an emerging markets proposition.

Woodford will not be running the company, which will be headed by fellow partner and chief executive Craig Newman, who joined him from Invesco.

Woodford told the Telegraph: ‘I want to concentrate on what I do best: managing money. When you work for an established business there will always be a creep of distracting bureaucracy: it’s the same in all industries.’

Woodford will kick off his new venture with around £4.5 billion in assets under management, after successfully winning the £3.5 billion St James’s Place mandates from Invesco Perpetual at the start of April, while his new income fund will have around £1 billion in assets.

Woodford told the FT: ‘I am hugely excited about this opportunity. It’s been a frustrating 12 months as I just want to get going with the new business.’

In terms of his investment philosophy, Woodford has emphasised that the new start will not signal a dramatic departure from his style at Invesco.

He told the FT that he will stick to his strategy of buying inexpensive unloved stocks and holding for them the long term.

‘I’m going to do what I have been doing for a very long time,’ he told the paper.

While Woodford has so far given little away about specific stocks that he will back through his venture, he told the Telegraph that he plans to go back into utilities.

According to the FT, he will also invest in small unquoted biotech companies.

Woodford Investment Management will be based in a business park in Oxford rather than the City.

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